● Ricoh Americas Corporation5 Dedrick Place, West Caldwell, New Jersey 07006, U.S.A.Phone: +1-973-882-2000 Facsimile: +1-973-882-2506http://www.ricoh-usa.com/

● Ricoh Europe PLC66 Chiltern Street, London W1U 4AG, United KingdomPhone: +44-20-7465-1000 Facsimile: +44-20-7224-5740http://www.ricoh-europe.com/

● Ricoh Asia Pacific Pte Ltd.260 Orchard Road #15-01/02 The Heeren, Singapore 238855Phone :+65-830-5888 Facsimile: +65-830-5830http://www.ricoh.com.sg/

● Ricoh China Co., Ltd.17F., Huamin Empire Plaza, No.728 Yan An West Road,Shanghai, ChinaPhone: +86-21-5238-0222 Facsimile: +86-21-5238-2070http://www.ricoh.com.cn/

● Ricoh Company, Ltd.IR Department, Corporate Communication CenterRicoh Building, 8-13-1 Ginza, Chuo-ku, Tokyo 104-8222 JapanPhone: +81-3-6278-5254 Facsimile: +81-3-3543-9329e-mail ricoh-ir@ricoh.co.jphttp://www.ricoh.com/ir/

NPO Color Universal Design Organization has certified this report as a

color universal design due to its easy-to-see features based on careful

color selection.

This report uses waterless printing, which requires no dampening water containing volatile organic compounds (VOCs).

This report is printed on FSC-certified paper that contains raw materials from well-managed forests certified by the Forest Stewardship Council (FSC).

Petroleum solvent-free vegetable oil ink was used to print this report.

ANNUAL REPORT 20081 ANNUAL REPORT 2008

Economic

Sustainability Report(Environment)

• Management policy• Management results• Financial status

Sustainability Report(Economic)

Earning the public’s trustActivity reports from 3 perspectives: “environment,”“corporate social responsibility,” and “economic”

• IR (Investor Relations) http://www.ricoh.com/IR/• Sustainable environment management http://www.ricoh.com/environment/index.html• Corporate social responsibility http://www.ricoh.com/csr/• Social contribution http://www.ricoh.com/about/csr_environment/sc.html• Information security http://www.ricoh.com/about/security/index.html

■ How to Obtain Ricoh’s Corporate Information

2 0 0 8 R I C O H G R O U P S U S TA I N A B I L I T Y R E P O R T( E C O N O M I C )

1

Sustainability Report(Corporate Social Responsibility)

■ Reporting guidelinesIn compiling this report, we have referred to GRI’s Sustainabil-ity Reporting Guidelines (version 3.0) to confi rm the items that should be reported, and tried to disclose as much information as possible.

Being a good corporate citizen means striving to be

a valued and respected member of society by con-

tributing to its sustainable growth. To this end, the

Ricoh Group believes in being outstanding in all ar-

eas of the environment, the economy, and corporate

social responsibility as well as openly communicat-

ing its activities. The Ricoh Group publishes infor-

mation on its activities in reports written from three

different perspectives: the environment, the econo-

my, and corporate social responsibility. This report

provides our shareholders, customers, and other

stakeholders with information on our management

policies, business performance in fiscal 2008, and

fi nancial condition to facilitate a better understanding

of what we do and how we work.

Environment

Corporate Social Responsibility

• Concept of CSR• Integrity in corporate activities• Harmony with the environment• Respect for people• Harmony with society

• Concept of sustainable environmental management

• Improving our products• Improvements made at business sites• Basis for sustainable environmental

management• Social contribution of environmental

conservation/Environmental communication

2008R I C O H G R O U P

S U S T A I N A B I L I T Y

R E P O R T

( E N V I R O N M E N T )

R I C O H G R O U P

S U S T A I N A B I L I T Y

R E P O R T C O R P O R A T E S O C I A L R E S P O N S I B I L I T Y 2008

ANNUAL REPORT 2008 2

Corporate Profile

Ricoh Company, Ltd., is a leading global manufacturer of office auto-

mation equipment. Our lineup includes copiers, multifunctional and

other printers, facsimiles, personal computers, and related supplies

and services, as well as digital cameras and advanced electronic de-

vices. We are rapidly building a solid presence worldwide as a provider

of comprehensive document solutions that help customers streamline

their businesses and cut operating costs.

The Ricoh Group includes Ricoh Company, Ltd. and 317 subsidiar-

ies and affiliates – 105 companies in Japan and 212 overseas, togeth-

er employing around 83,400 people.

● Cautionary Statement

Ricoh bases the estimates in this annual report on information currently available to management, which involves risks

and uncertainties that could cause actual results to differ materially from those projected.

Financial HighlightsRicoh Company, Ltd., and consolidated subsidiaries for fiscal 2008 and fiscal 2007

Net sales

For the year:

Japan

Overseas

Basic

Diluted

Net income

Cash dividends declared

At year-end:

Per share data(in yen and dollars):

Net income

Total assets

Shareholders’ equity

Millions of yen Thousands ofU.S. dollars

% change

¥2,068,925

¥1,002,251

¥1,066,674

¥111,724

¥153.10

¥151.89

¥28.00

¥2,243,406

¥1,070,913

¥2,219,989

¥1,016,034

¥1,203,955

¥106,463

¥146.04

¥142.15

¥33.00

¥2,214,368

¥1,080,196

$22,199,890

$10,160,340

$12,039,550

$1,064,630

$1.46

$1.42

$0.33

$22,143,680

$10,801,960

7.3%

1.4%

12.9%

−4.7%

−4.6%

−6.4%

17.9%

−1.3%

0.9%

2007 2008 2008 2008/2007

*As a result of the sale of business, the operating results from the discontinued business have been reclassified since last year from fiscal 2003 to 2006 in this report.

Editorial Policy

Corporate Profile

Financial Highlights

Contents

To Our Shareholders and Customers

Fiscal 2008 Highlights

16th Mid-Term Management Plan

Fiscal 2008 Milestones

Corporate Governance / CSR

Sustainable Environmental Management

Financial Section

1

2

2

2

3

7

11

17

19

21

22

ANNUAL REPORT 20083

To Our Shareholders and Customers

Setting new records in sales and operating income

In the year ended March 31, 2008 (fiscal 2008), the Ricoh

Group set new records again in consolidated net sales and

operating income and marked its 14th straight year of sales

growth. Consolidated net sales grew 7.3% over the prior fiscal

year to 2,219.9 billion yen (US$22.2 billion). Operating income

rose 4.1% to 181.5 billion yen (US$1.8 billion). Net income de-

clined 4.7% to 106.4 billion yen (US$1.0 billion) primarily due

to last year’s gain from the sale of discontinued operations.

During fiscal 2008, the Ricoh Group grew sales across all

of its produce lines: Office Solutions, Industrial Products, and

Other. The Office Solutions segment was the leading locomo-

tive of the growth, recording a continued increase in sales

of digital plain paper copiers (PPC), multifunctional printers

(MFP), printers, and other products both in Japan and over-

seas. In each product category, color products played a leading

role.

Gross profit increased primarily due to bolstered sales of

color MFP devices and other high value-added products, our

ongoing cost reduction efforts, and to a lesser extent, favor-

able exchange rates.

Meanwhile, selling, general, and administrative (SG&A) ex-

penses increased 8.5% from a year earlier to 746.2 billion yen.

As the Group has been focusing on developing new products,

its research and development (R&D) expenses remained at

high levels, recording an increase of 11.0 billion yen from the

year before to 126.0 billion yen (5.7% of net sales). Other ma-

jor factors in the rise of SG&A expenses include our intensified

efforts to extend the breadth of our business portfolio and to

improve our capabilities to deliver optimal solutions to custom-

ers.

The Group’s net income per share was 146.04 yen

(US$1.46) and return on equity was 9.9%. We announced an

annual dividend per share of 33.00 yen (US$0.33). This was

the eighth year in a row that we have increased our dividend.

Slightly negative cash-flow due to aggressive investment for future growth

Free cash flow generated by operating activities and invest-

ing activities was a negative 3.9 billion yen (US$40 million).

Increase in cash disbursement due to the formation of a joint

venture with IBM Corporation more than offset the increase in

depreciation and assets due to the expansion of our business.

Total assets showed a decline of 29.0 billion yen from a

year earlier to 2,214.3 billion yen (US$22.1 billion). Sharehold-

ers’ equity increased by 9.2 billion yen to 1,080.1 billion yen

(US$10.8 billion), reflecting the increase in retained earnings.

Equity ratio improved by 1.1 percentage points to 48.8%.

Achievements in the final year of the 15th Mid-Term Management Plan

The Ricoh Group aims to help customers improve their busi-

ness processes and productivity through its core Office Solu-

tions business. To this end, we have been working to change

the business structure of our Office Solutions whereby we will

not merely manufacture and sell copiers, printers, and other

equipment but offer optimal document management systems

supported by digitized and networked imaging equipment.

In its 15th Mid-Term Management Plan, the Group strived

to make its copiers and printers for general offices stronger

constituents of its revenue base. We promoted a shift from

black & white to color, and launched new products featuring

advanced digital technologies and network connectability in

order to provide solutions that best suit customers’ needs and

the business environment. The Group has also focused on ag-

gressively expanding its business in its targeted growth areas:

production printing and low-end products.

In fiscal 2008, the final year of the 15th Mid-Term Manage-

ment Plan, the Group expanded product offerings in the Office

Solutions category, marketing a number of new color multi-

functional copiers and color laser printers. With new products

characterized by excellent environmentally friendliness, high

image quality, and advanced security functions, the resulting

ANNUAL REPORT 2008 4

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product lineup enabled the Ricoh Group to attain large market

shares in color copier/multifunctional copier markets both in

Japan and overseas.

In the low-end printer market, the Group marketed new

color laser printers and GELJET printers. The former are as

compact and highly productive as their black & white peers,

and the latter feature advanced versions of Ricoh’s original

GELJET technology.

The Ricoh Group’s products, customer contact, and sup-

port services have received external recognition for their ex-

cellent quality. Ricoh ranked highest in customer satisfaction

with both color printers and black & white printers in the 2007

Japan Printer Satisfaction Study by J.D. Power Asia Pacific.

Ricoh also marked highest scores both for color machines and

black & white machines in the 2007 Japan Copier/Multifunction

Product Customer Satisfaction Study by this global customer

satisfaction research fi rm. Furthermore, Ricoh Technosystems

Co., Ltd. received the highest evaluation for system planning

and construction for the second consecutive year in J.D. Power

Asia Pacifi c’s 2007 Japan Solution Provider Satisfaction Study.

In June 2007, Ricoh established InfoPrint Solutions Com-

pany, a joint venture company with IBM, to gain a stronger

foothold in the production printing market. Creating synergy

between the Ricoh Group’s strengths in hardware and soft-

ware development and production and InfoPrint’s strengths in

service, software, and IT solutions, the Ricoh Group provides

superb output solutions for business customers to meet their

offi ce printing, industrial printing, large printing systems, com-

mercial printing and various other needs.

In the Industrial Products business, a new thermal media

factory in China started operation in fiscal 2008, which has

enabled us to ensure high product availability in the Chinese

market, a highly promising market. Ricoh’s semiconductor

products such as power supplies ICs for mobile phones have

attained leading market shares worldwide.

We also focused on strengthening our business infra-

structure on an ongoing basis to facilitate the execution of

our growth strategies. We integrated our sales and service

subsidiaries in Europe, the Americas, and Japan to strengthen

our sales networks and to make them more effi cient. We also

achieved substantial improvements in our design and develop-

ment processes by employing a cross-functional structure and

implementing operational reforms at the Ricoh Technology Cen-

ter, our centralized function for design and development.

Going forward with the 16th Mid-Term Management Plan

Under its 16th Mid-Term Management Plan (for the three years

from fi scal 2009 to 2011), the Ricoh Group will aim to earn even

greater trust from customers. Intensifying our customer-centric

approach, we are committed to providing products and services

that meet and exceed customers’ expectations.

Our Office Solutions segment, in particular, is well posi-

tioned to meet increasingly diversifi ed demands from a greater

number of customers and ultimately become a more powerful

mainstay of our business. To make it happen, we will lever-

age our excellence in customer contact, solutions, and image

processing technologies, as well as global coverage and the

breadth and depth of our product mix.

Specifi cally, we will continue to strive for greater customer

value by addressing customers’ prioritized issues, i.e., work-

flow, security, “TCO (total cost of ownership),” compliance,

and the environment. We will also help our customers improve

their business productivity through our printing solutions and

document solutions. The former delivers effi cient networking of

multiple copiers and printers and the latter develops and imple-

ments fi le server-based central systems for storage, search, and

output. Furthermore, we are planning to launch a Businesses

Process Outsourcing business in which we can demonstrate

our competitive edge. To help execute such a multifaceted strat-

egy, the Ricoh Group intends to develop solution platforms and

enhance its solution sales structure.

The Group will also aim at expanding its business portfolio

ANNUAL REPORT 20085

in the printing market. To achieve this, we will enhance low-

end categories by making our color laser printers and GELJET

printers even more attractive to customers and enter the pro-

duction printing segment as early as practicably possible.

In the Industrial Products segment, our resource alloca-

tion policy is to prioritize business areas having high growth

potential. We will also intensify collaboration with other tech-

nological and business areas to create new businesses.

In both the Office Solutions and the Industrial Products

segments, the Ricoh Group will strive to identify and capture

opportunities in emerging markets.

We recognize that technology-driven competitiveness is

the key to generating and increasing customer value and im-

proving the profitability of each segment. To these ends, the

Ricoh Group will continue to make its upmost efforts to fur-

ther enhance its technological capabilities.

Harvesting the fruits of prior investments and leaping forward

In a rapidly changing business environment marked by in-

creasingly diversified customer needs and intensified competi-

tion in various fields, such as color products and solutions

services, the Ricoh Group is determined to continue to grow

for many years to come and thus establish and strengthen its

position as a leading global brand. We believe that whether we

can achieve this goal is dependent on our efforts to increase

our competitiveness by creating customer value and improv-

ing management efficiency.

To deliver greater value to our customers, we will place

more emphasis on Ricoh’s customer satisfaction-oriented

approach in our business operations. We will also continue

translating Ricoh’s three core values—i.e., Harmonize with the

environment, Simplify your life & work, and Support knowl-

edge management—into our products and services. In other

words, we aim to create “customer delight.”

In addition, the Ricoh Group will continue to improve busi-

ness efficiency to beef up the earnings strength of the Group as

a whole as well as each business segment. We will continue our

structural reform of development, production, marketing and

other necessary functions, select and focus on strategically

important businesses, and further our improve business pro-

cesses. We will work diligently to ensure that the investments

we have made for future growth bear fruit in generating profit.

Then we will reinvest the generated profits in business ar-

eas with a high growth potential and in our efforts to develop

our technological capabilities. By doing so, the Ricoh Group

will pursue both top-line and bottom-line growth and greater

enterprise value.

With its group vision “A Winner in the 21st Century” (build

a strong global RICOH brand), the Ricoh Group has been oper-

ating its business aggressively as a leader in office equipment

evolution in our advancing information society and as a reli-

able supporter for productivity improvement and knowledge

creation for our customers. Going forward, we will remain

committed to creating customer-centric value based on our so-

phisticated technologies. We will also aim to earn even greater

trust from customers and grow further as a leading global cor-

poration. To be valued by society at large, we will continue to

strengthen trusting relationships with all stakeholders. In this

way, the Ricoh Group—an ever-evolving enterprise—will con-

tinue its journey.

June 2008

ANNUAL REPORT 2008 6

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Shiro KondoPresident and Chief Executive Officer

Masamitsu SakuraiChairman

ANNUAL REPORT 20087

Fiscal 2008 Financial Highlights (Consolidated)

(%)

(Billions of yen)

Operating margin

Net margin

Net sales

(Billions of yen)

Operating incomeNet income

C

D

Japan (left scale)Overseas (left scale)

Operating income (right scale)Net income (right scale)

2,000

1,500

1,000

500

0 0

50

100

150

200

7.3 7.8

5.14.64

6

8

7

5

2005

841.

11,

807.

496

6.2

83.1

131.

1

2006

966.

294

3.0

1,90

9.2

148.

597

.0

2008

1,20

3.9

2,21

9.9

1,01

6.0

181.

5

106.

4

8.4

5.44.8

2007

1,06

6.6

2,06

8.9

1,00

2.2

174.

3

111.

7

8.2

5.2

8.2

2004 (FY)

866.

11,

773.

390

7.1

145.

4

91.7

A

A

B

C D

B

C

D

FY2008

FY2008

Other166.0(7.5%)

Other165.9(7.4%)

Overseas1,203.9(54.2%)

The Americas434.7(19.6%)

Europe603.2(27.2%)

Japan1,016.0(45.8%)

Imaging Solutions1,709.4(77.0%)

Network System Solutions200.0(9.0%)

Office Solutions1,909.5(86.0%)

Industrial Products144.3(6.5%)

● Sales by area (billions of yen)

● Sales by category (billions of yen)

The Ricoh Group grew its sales in all business segments, especially color MFPs and laser printers. Overall sales rose 7.3% from the previous year, marking the 14th consecutive year of growth. Contribution of overseas sales to the Group’s overall sales increased from a year earlier— sales in Japan grew 1.4% to 1,016.0 billion yen and overseas sales grew 12.9% to 1,203.9 billion yen. Operat-ing income increased 4.1% to 181.5 billion yen, driven by increased sales of high value-added products and continued cost reduc-tion efforts, among other things. Net income declined 4.7% to 106.4 billion yen, mainly due to the previous year’s gain from the sale of discontinued operations.

(%)

(Yen) (Yen)

Consolidated dividend payout ratio

150

100

50

0 0

30

20

10

2004 (FY)2005 2006 2007 2008

14.617.8 18.1 18.3

22.6

123.

6318

.0 112.

6420

.0

132.

3324

.0

153.

10

146.

04

28.0

33.0

10

15

20

Net income per share (left scale)

Dividends per share (right scale)

A

A

B

B

Ricoh announced an annual dividend of 33.0 yen, an increase of 5.0 yen from the previous year. The Group’s consolidated dividend payout ratio improved to 22.6%.

17.9% (increase in dividends)

Net sales, operating income, net income, operating margin, and net income margin (net sales)

2,219.9 billion yen

Net income per share, dividends, and consolidated dividend payout ratio

ANNUAL REPORT 2008 8

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Total assets showed a decline of 29.0 billion yen from a year earlier to 2,214.3 billion yen, especially due to the decrease in cash and cash equivalents resulting from the formation of a joint venture company with IBM Corporation. Interest-bearing liabilities decreased by 31.2 billion yen as a result of enhanced cash management. Shareholders’ equity increased by 9.2 bil-lion yen to 1,080.1 billion yen, refl ecting the increase in retained earnings.

(%)

(Billions of yen)

Return on equity (ROE)

Income before income taxes on total assets

Total assets Shareholders’ equity

12.6

7.4

10.0

6.9

10.6

7.6

11.09.9

8.1 7.8

2,000

1,500

1,000

500

02004

(End of March)2005 2006 2007

1,85

2.7

1,95

3.6

2,04

1.1

2,24

3.4

795.

1

862.

9

960.

2

1,07

0.9

2008

2,21

4.3

1,08

0.1

6

9

12

A B

A B

(Billions of yen) Operating cash flow Investing cash flow Free cash flow200

150

100

50

0

50

-100

-150

-2002004 (FY)

151.

0

87.6

-63.

4

2005

129.

1

33.0

-96.

0

2006

173.

4

53.4

-120

.0

2007

167.

2

51.8

-115

.4

2008

194.

3

-3.9

-198

.3

A

A

B

B

C

C

While depreciation, as well as assets due to business expan-sion, increased, cash and cash equivalents decreased as a result of the formation of a joint venture with IBM Corporation. As a result, free cash fl ow generated by operating and investing activities declined by 55.8 billion yen from the previous year to negative 3.9 billion yen.

Common stock price(Yen)3,500

3,000

2,500

2,000

1,500

1,000

500

0

2004 2005

4 1 2 3 4 5 6 7 8 95 6 7 8 9 10 11 12 10 11 12

2006

1 2 3 4 5 6 7 8 9 10 11 12

2007 2008

1 2 3 1 2 34 5 6 7 8 9 10 11 12

Total assets, shareholders’ equity, income before income taxes on total assets, and return on equity (ROE)

9.9% (ROE)

Operating cash flow, investing cash flow, and free cash flow

-3.9 billion yen (free cash flow)

ANNUAL REPORT 2008�

imagio MP C7500

IPSiO GX3000SF

● Main productsImaging Solutions: digital copiers, color copiers, multifunctional printers (MFPs), printers, analog copiers, digital duplicators, facsimiles, diazo copiers, scanners, other equipment, supplies, maintenance services, software, etc.

Network System Solutions: personal computers, servers, network devices, net-work software, application software, customer support and service, etc.

Our Office Solutions, comprising Imaging Solu-tions and Network System Solutions, allow our customers to improve their office productivity with a range of offerings from office equipment, information-processing equipment, maintenance services, and supplies, as well as IT infrastructure development, network environment operation, user support, and other services. Focal areas in this segment include printing solutions—which assist customers in transitioning from black/white to color, total cost of ownership (TCO) manage-ment, and many other initiatives—and document solutions which help customers improve their document workflow. We are also taking a variety of steps to expand our printing business in both high-end and low-end markets.

IPSiO SP C220

Color MFPs Laser printers GELJET printers

Office Solutions

Our Other operations include our digital camera business as well as financial and logistic services respectively offered by our leasing and logistics subsidiaries.

R8 Caplio GX100

Other

In Industrial Products, we manufacture and market thermal media, optical equipment, semi-conductors, electric components, and measuring equipment, while focusing our resources on high-potential businesses.

RP 400 Series Loyalty cards and clothing hangtags Built-in motherboards FB14

Industrial Products

Network System Solutions

mm

Semiconductors Thermal media Electric components

Digital cameras

● Main products Thermal media, optical equipment, semiconductors, electric components, measuring equipment, etc.

● Main products Digital cameras, etc.

Fiscal 2008 Highlights by Product Line

Business Outline

Business Outline

Business Outline

ANNUAL REPORT 2008 10

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Ricoh ranks top in five categories in J.D. Power’s customer satisfaction survey in JapanRicoh was recognized as Japan’s best company in 2007 in terms of customer satisfaction in both the color and monochrome copier/multifunctional copi-er categories, as well as in both the color and mono-chrome laser printer categories (color laser printers won the highest recognition for the second straight year), according to a survey by J.D. Power Asia Pacifi c, Inc., an international customer satisfaction survey firm. In this survey, Ricoh Technosystems Co., Ltd. also ranked highest in IT system planning and construction for the second consecutive year.

Thermal media plant in Jiangsu, China begins operationRicoh Thermal Media (Wuxi) Co., Ltd. began opera-tion in April 2007 as our manufacturing base for high value-added thermal paper, enabling us to provide a more stable supply of this rapidly-growing product in the Chinese market.

Fiscal 2008 Overview

Net sales in Imaging Solutions rose 8.2% from the previous year to 1,709.4 bil l ion yen, reflecting growth in sales for this category both in Japan and overseas, especially in color products. The expanded product lineup and bolstered solut ion sales structure of t h e Gr oup c on t r i bu t e d t o these positive results. During the year Ricoh launched many new color MFP products in its standard new-generation color model lineup, and these sales played a signifi cant role in this sales growth. In the meanwhile, net sales in Network System Solutions rose 3.0% to 200.0 billion yen. The main driver of the growth was IT services, which grew in connection with the expansion of the solutions business. Japan’s sales in personal computers and PC servers also inched up. Overall, net sales in the Offi ce Solutions segment went up 7.6% from a year earlier to 1,909.5 billion yen.

Fiscal 2008 Overview

Net sales in the Industrial Prod-ucts segment increased 8.2% from the prior year to 144.3 billion yen, fueled by steady growth in semiconductors, thermal media, and electric components.

Fiscal 2008 Overview

Net sales in the Other segment grew 3.1% to 166.0 billion yen, driven by the solid performance of the leasing business as well as increased sales of digital cameras both in Japan and overseas.

Caplio GX100 wins many accoladesRicoh’s Caplio GX100 received the gold award at iF Product Design Award 2008 for its excellent design. This digital compact camera launched in April 2007 was also recognized by a leading US photography magazine in its 2007 POP Awards, as well as by the Technical Image Press Association (TIPA) as the Best Prestige Camera in its TIPA Awards 2007, and many others.

Office Solutions net sales (billions of yen)

(FY)

Imaging Solutions

1,637.2

1,909.5

0 500 1,000 1,500 2,000

1,446.6

1,709.4

2006

2008

1,774.4194.3

1,580.12007

190.5

200.0

A

A B

Network System SolutionsB

(FY) 0 50 100 150

2006 120.6

144.32008

133.32007

Industrial Products net sales (billions of yen)

(FY) 0 50 100

2006 151.3

161.02007

166.02008

Other net sales (billions of yen)

150

ANNUAL REPORT 200811

The Ricoh Group will offer innovative products and services with “Ricoh Value.”The time is ripe to reap the benefits of our structural reform and large investments and translate those benefits into increased profit. With this tailwind, the Ricoh Group has embarked on a new journey aiming to maximize its enterprise value. We are determined to become and remain a strong global brand in the 21st century.

During the 16th MTP, the Ricoh Group’s true value will be tested.

As information technology (IT) advances, customers are com-ing to have totally different standards for office equipment and information devices. Hardware quality used to be overridingly important to most customers. However, the satisfaction and

delight experienced by today’s customers often comes from solu-tions generated by and service associated with the hardware they purchased. Customers’ buying behavior is also changing. Rather than taking a piecemeal approach, e.g. on a divisional or product basis that many customers did before, customers tend to manage their procurement plans on a company-wide basis, selecting and buying optimal products that fit their purpose and usage, such as networking, security enhancement, workflow management, and environmental management. Moreover, traditional product categories like those for multifunctional printers (MFP) and laser printers are coming together as markets undergo a new “fusion.” To meet evolving customer needs in a changing business environ-ment, we must propose solutions that can reach out to our cus-

Shiro Kondo President and Chief Executive Offi cer

16th Mid-Term Management Plan

Moving beyond customer satisfaction to customer delight:We change our business processes drastically to establish Ricoh Quality.

Q1 Tell us about the basic ideas behind the 16th Mid-Term Management Plan (MTP).

ANNUAL REPORT 2008 12

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tomers’ overall workfl ow level, create new and greater customer value, and bring transformational innovation to their workfl ow. In recent years, we often hear that the offi ce equipment market has fully matured. When one cycle of industry development has run its course, related solutions businesses will burgeon here and there. Given this, I think the offi ce equipment market has experi-enced one complete business life cycle. We must anticipate what is coming next in the new era and what the Ricoh Group should deliver there. In doing this, our true value will be tested.

In the 16th MTP effective from April 2008, we defined our role as delivering innovative products and services with Ricoh Value in the information society. Ricoh Value is the basis for the value that we deliver to all our customers through our products and services and specifi cally enables them to harmonize with the environment, simplify their life & work, and support knowledge management. In this MTP period, we will also need to explore who we are once again from the perspectives of all our differ-ent stakeholder groups. For example, our pursuit of maximizing enterprise value must be based on the full understanding of what our shareholders expect us to be like. And as prerequisites, the Ricoh brand really needs to stand out in the global market and the Ricoh Group must achieve outstanding business performance

4F

3F

2F

1F

■ Creation of new customer value based on our existing businesses

Dir

ecti

on

of

valu

e p

rop

osi

tio

ns

ServicesSupportSupplies

Document solutions

Printing solutions

Network devices

Standalone devices

Ricoh’s excellence

● Sustainable environmental

management

● Solutions proposals

● IT performance improvement

(business analysis)

● Globally consistent support

● Solutions platforms

● Customization capabilities

● Global sales network

● Network administration system

● Full product range

● Front runner in digitization and

networking

● CS and customer contact capabilities

● Technologies to integrate image

processing and data processing

■ 16th MTP targets (by the end of fiscal 2011, consolidated)

Net sales :

Operating income :

Operating margin :

ROE :

¥2,500 billion

¥250 billion

10.0%

12.5%

upheld by world-class quality products and services. The fi nancial targets for the 16th MTP announced in March 2008 should be po-sitioned as a minimum requirement for a global corporation and I believe we should aim at even higher goals in practice.

Q2 Tell us about your key strategies to reach the targets under the 16th MTP.

1) Becoming the market leader in each of our target businesses

The Ricoh Group is committed to becoming the leader in each segment in which we do business. Our upcoming products and services will be an eloquent showcase for this commitment. In our Offi ce Solutions, we conducted in-depth analysis on the changes in customer needs during the last mid-term period, based on which we offered various new solutions, such as developing re-mote management systems and customizing and enhancing sys-tems to address our customers’ new challenges. These innovative propositions have allowed Ricoh’s MFPs to survive and succeed in the market. We will continue studying and meeting our customers’ needs and generating new and greater value.

In our new production printing business, we made substantial investments during the 14th and 15th MTP periods. As a result, we are now well-prepared to make full use of our strengths; i.e., a global service network and solutions development capabilities, in this recently-entered market. The production printing market is just about to burgeon. We are determined to become a leading player in this fi eld and build a strong and solid business.

ANNUAL REPORT 200813

■ Priority efforts in Ricoh’s sustainable environmental management

Managing resources/energy used acrossthe entire lifecycle of related products

Developing environmental technologies

Conducting lifecycle management

Delivering Ricoh’s environmental activities to customers ■ Promoting Ricoh’s global brand

Commitments(meeting expectations)

Trust

Ricoh Brand

Customersand society

Ricoh ValueContinuously delivering three tangible benefits to customers

Harmonize with the environment

Simplify your life & work

Support knowledge management

2) Accelerating sustainable environmental management

Currently, inter-governmental agreements and actions are being re-quired on environmental issues, such as a successor agreement to the Kyoto Protocol, and the agenda of the Conference of the Parties (COP) to the U.N. Framework Convention on Climate Change. In sync with these governmental movements, business communities are un-der increasing pressure since around last year to make a commitment to their environmental conservation goals. For the Ricoh Group, sus-tainable environmental management is anything but a new fad. Even when I was a design engineer, we already had a variety of schemes in place to recycle our products. Such steady efforts and improvements over years make Ricoh’s sustainable environmental management what it is today, securing a high reputation both in Japan and else-where in the world.

I am always thinking about in which direction I should lead Ricoh. Some companies are recording astonishing sales, say hundreds of thousands of units per month, in the current printer market. But when you look closer, only some 20% of the printers sold are used con-stantly and the remaining 80% are used only occasionally. Estimated total pages printed by their products would be the same as those printed by just a few tens of Ricoh’s MFPs. While I acknowledge budget printers are valuable in that they readily provide printing op-portunities to home users, I cannot help wondering whether spending huge amount of resources and energy to create rarely-used products only to meet this single purpose is the right thing to do in the present and future global environment. When we say we are aiming to har-monize with the environment as a key element of Ricoh Value, we are not merely talking about the energy-effi cient products and services we provide, but also about the attitude and mindset we espouse. It is part of our mission to make positive contributions to reducing the environmental impacts generated by business offi ces worldwide. To achieve this, we will intensify and accelerate our sustainable environ-mental management.

3) Promoting Ricoh Quality

The Ricoh Group has been satisfying various customer needs, such as reductions in operational costs and improvements in business processes. Going forward, we must raise the bar and achieve a qual-ity that exceeds our customers’ expectations. This quality, which delights our customers, is what we call “Ricoh Quality.” To pursue Ricoh Quality, we have made organizational changes in April 2008 aiming at further structural reform of the entire R&D processes, which is anticipated to be highly time-intensive. As the next step, we plan to implement drastic reform of the remaining processes, includ-ing production, marketing, and service.

4) Creating new areas of growth

I enjoy growing plants and vegetables. This hobby teaches me every day that you can’t reap what you do not sow. Nothing will grow in empty soil. Even when collecting edible wild plants, there are rules to follow. You should not root up everything or otherwise nothing will grow on the site anymore. I think these lessons apply to the Ricoh Group, whose growth has been driven by constant innovation.

A good example is GR DIGITAL, a digital version of Ricoh’s GR series of high-quality compact fi lm cameras which have been well-received by professionals and other skilled photographers. GR DIGI-TAL made its debut in 2005 as a digital camera that captures scenes in exactly the way the users intends. Since then, we have nurtured this product, which eventually evolved to become a hallmark of Ricoh Value. This fact is supported by the many external awards that GR DIGITAL has received, including the Camera of the Year and the Edi-tors Award from the Camera Grand Prix Awards. Moving ahead, we will work to generate a similar cycle to develop new growth areas—creating new customer value based on Ricoh’s existing core compe-tencies, developing and translating it into a new business, and using the new business to stimulate further growth in other core busi-nesses.

5) Building a strong global brand

The Ricoh Group has leading market shares worldwide. We are grate-ful for such strong market positions as they are a testament to how much Ricoh’s products and services are valued by our customers around the world. But rather than being complacent, we have made a fresh commitment to becoming the brand of choice with strong customer loyalty by delivering Ricoh Value through our products and services. Toward this goal, the Ricoh Group will single-mindedly work to establish a strong Ricoh brand in the global arena in an earnest manner, capitalizing on the worldwide sales and service network of InfoPrint Solutions Company, a new member of the Group, and taking many other initiatives.

ANNUAL REPORT 2008 14

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Q3 How do you summarize the results of the 15th MTP?

Q4 How do you plan to achieve a consoli-dated operating margin goal of 10% under the 16th MTP?

Ready to reap the benefi ts of structural reform

In the 15th MTP, the Ricoh Group implemented a two-pronged growth strategy: creating greater customer value and managing our opera-tions even more efficiently. To create greater customer value, we identifi ed MFPs as a key revenue driver, promoting their transition to color and working to build a greater presence in the high- and low-end markets. At the same time, we began to implement large-scale investments and other programs to make our operations inherently more effi cient. In the course of these processes, however, we were faced with a gap between where we were and where we wanted to be. We realized that for further growth we must begin implementing busi-ness process reform. Since then, we have been advancing large-scale reform at the speed of light under the slogan, “Create Without Mak-ing.” For example, we have drastically changed our product develop-ment process, established cost-effective operations, and developed and streamlined the sales network of our solutions business.

Looking at our scorecard for the 15th MTP period, we nearly met our sales target but missed the operating income target by a wide margin. Major factors behind this shortfall include the effects of exchange rates, the economic slowdown in North America, and the realization of slower-than-expected benefi ts from the investments we made in business expansion and streamlining.

On a positive note, the Ricoh Group had successfully established a solid R&D system that gives birth to highly competitive products during this period. Concurrently, our manufacturing facilities in China started operating at full capacity and low-cost Ricoh production pro-cesses have taken off. As a result, a full-range of color products was made available in our product portfolio. Another achievement during this period was that our sales operation in Japan expanded sales in the solution business and steadily grew IT-related services, which we attribute to the integration of regional sales subsidiaries and other measures taken in the past. Our overseas sales subsidiaries have also been being integrated and our sales operations use integrated IT sys-tems worldwide. We can expect even greater effi ciency of our sales operations in the future, which will surely make a great contribution to our earnings. In addition, we laid the groundwork for the produc-tion printing business with substantial investments and introduced new products in the low-end market at a steady pace under the last mid-term management plan.

The next 16th MTP has just started, and it’s time for the Ricoh Group to harvest the benefi ts of the structural reform we have done. We will strive to establish an even stronger manufacturing system and organization, including a planned new plant in Thailand. It would be fair to say that the Ricoh Group is well-prepared to make a fresh start and achieve steady revenue growth, looking three or even ten years ahead.

Focusing on profi tability—attaining an operat-ing margin of 10% is a must

While in a relative sense, the 15th MTP focused on expanding busi-ness fi elds, the current 16th MTP puts great emphasis on profi tability, calling for an operating margin of 10%. We consider this percentage goal is the minimum requirement for a leading global fi rm. Thus we will work to improve the profi tability of our existing businesses, cen-tering on further development of solutions offerings.

As hardware matters less and less to customer value, some com-petitors have scaled back or discontinued their hardware operations, but the Ricoh Group has no intention of doing so. That being said, we are fully aware that customer value is usually generated at a closer point to customers and thus we will endeavor to improve our capabili-ties to provide solutions at customer touch points.

We also recognize that it is crucial to make our production print-ing and low-end businesses contribute to our sales growth. In the Industrial Products and the Other segments, we will aim to improve profi tability mainly through even more focused business operations. We will go to the great length of improving profi tability not only of our mainstream businesses but of all the businesses of the Ricoh Group. Toward this, we plan to reinforce less profi table segments to generate greater sales, consider the future direction of unprofi table units, and take many other necessary actions.

ANNUAL REPORT 200815

Establishing a best-in-class structure to capture the rapidly-growing market

Production printing is expected to become a two-trillion-yen market within a few years, doubling the current market size of one trillion yen. This fast-growing market is experiencing drastic changes in customer needs, market trends, and many other things. The Ricoh

Group, having entered this market in full force, sees these changes as opportunities to establish a solid foundation in this fi eld and intends to make the most of our group-wide strengths to achieve this. We already have a wide range of products and a strong team and struc-ture for this market. With a combination of Ricoh’s development, manufacturing, sales, and service networks and three new group companies’ strengths in hardware products development, system building, and worldwide service networks, we assess that on balance, the Ricoh Group is a provider of the highest caliber in the production printing sector. During the 16th MTP period, our specifi c business strategies in this market will finally unfold with a number of new products introduced in each category. In fi scal 2009, the fi rst year of the current MTP period, our business expansion plan will begin with a launch of color machines in the light production printing market.

■ Basic strategies for each market segment

Corporate printing market Commercial printing market

Production printing market

DataCenter

In Plant PFP DigitalPrinter

Capturingthe Transpromo

market

Distributing transaction output jobs

Shifting from offset

printing

In-h

ou

sep

rin

tin

g

Co

mm

erci

alp

rin

tin

g

Expanding bothtransaction and distributed

printing businesses

Capturing the colorPOD market

Production Printing Business at Ricoh

I n F o c u s

Ricoh Pro C�00

Aiming to seize the new market with great market agility and responsiveness, as well as full use of the Group’ strengths

Ricoh categorizes the production printing market into the fol-lowing four segments: (1) the “Data Center” for mass produc-tion of operational documents, e.g., bills and fi nancial state-ments, by host printers; (2) “In Plant” services for in-house print-on-demand (POD), e.g., for manuals and training tools; (3) “Print for Pay (PFP)” for commercial POD operators, such as copy shops; and (4) the “Digital Printer” for commercial transaction output and POD printing services by printing and direct mail service operators. In all segments, a wide variety of changes have been occurring in recent years, such as a shift from offset to on-demand printing, integration of transaction output and POD printing processes by so-called “TransPromo,” and outsourcing/decentralization of transac-

tion output processes. To tap into this dynamic market, the Ricoh Group has made steady efforts. In 2004, the Group acquired currently named Ricoh Printing Systems, Ltd., which has outstanding hardware development capabilities, and in 2007, it acquired the European operations of Danka Businsss Systems — renamed as Infotech Europe as a new Ricoh Group member—which has a strong sales and service base in Europe for high-speed equipment. In 2007, the Group also launched InfoPrint Solutions Company, with IBM Corporation. This joint venture has unparalleled IT solution technologies, system development, and sales and service networks. The combination of Ricoh’s traditional core competencies and these three new group companies’ product/solution develop-ment capabilities and customer bases has made the Ricoh Group’s competiveness rock-solid. Under its 16th Mid-Term Management Plan, the Group will make the most of its com-petitive edge in implementing strategic initiatives to seize the TransPromo and the color POD segments, and to gain a stron-ger position in both the transaction and distributed printing markets. In May 2008, Ricoh announced a roll-out of Ricoh Pro C900, its strategic product for the color POD market, which jump-started the Group’s efforts to expand its business under its current management plan.

Q5 Production printing is an important driver of growth for the Ricoh Group. Where do you excel? What are your plans down the road?

ANNUAL REPORT 2008 16

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Q6 What are the key points in implement-ing reforms under the 16th MTP?

Implementing across-the-board reforms through matrix management

During the last MTP period, we started transforming our R&D orga-nization, which was anticipated to take the longest time to complete, as the initial effort for broader reform processes. By integrating all R&D functions into the newly established Ricoh Technology Center in Ebina City in Kanagawa Prefecture, we have been promoting drastic reform of our R&D process under the theme of “Create Without Mak-ing.” What we mean by this theme is to conduct the R&D process at high speed and low cost with the minimal development of physical prototypes.

In the old days, something that I myself have done in the past, engineers spent many sleepless nights in creating prototypes, with many failed attempts. Such “sweat and tears” stories are no longer appreciated in this day and age because we will not be able to win the current intense development race without having smart, effi cient development systems. When developing strategically important products, we used to assemble project teams consisting of the best and brightest talent from across the company. However, this method faces its limitations in today’s environment where multiple main prod-ucts are being developed simultaneously.

To address this issue, I decided to adopt a matrix management approach. Although it was a really painful process, the organizational reform implemented has enabled our R&D to simultaneously develop several product lines from low- to high-end. In the current 16th MTP, we are planning additional expansion of the facilities at the Ricoh Technology Center to bring further innovation into our R&D manage-ment.

During the 16th MTP period, we intend to extend the drastic reform by incorporating matrix management across the entire organi-zation, including manufacturing, marketing, and service departments. Then we will promptly intensify three-dimensional collaboration among the three departments. We will also strengthen our solutions provision capabilities—the key to profi table growth. Each of us in the Ricoh Group must ourselves practice leading-edge and highly effi-cient operations, management processes, and workfl ows, and deliver compelling solutions ideas based on our own experience. By doing so, the Ricoh Group aspires to become synonymous with the “offi ce revolution” and make our business processes a showcase for Ricoh Value. We will be as dedicated to promoting this operational reform as we would be if reinventing our organization from scratch.

Inviting our shareholders to share the future with the Ricoh Group

In presenting the fi rst mid-term management plan of my presidency at Ricoh, I would like to emphasize to our shareholders that the Ricoh Group is an enterprise with high growth potential. In aiming for our ROE target during the 16th MTP period of 12.5%, we aim to improve the profi tability of our business by delivering high added value to cus-tomers, managing our operations very effi ciently, and thus achieving an operating margin of 10% during the period. Together with these efforts, we will also take the necessary steps to improve the total as-set turnover and increase the asset effi ciency in order to get on track to reach our ROE target. In line with the targeted growth in profi tabil-ity, we intend to improve our shareholder return, including dividend increases. In aiming for a long-term dividend payout ratio target of 30%, we will be working to make steady improvements from the cur-rent levels. Going forward, we will also intensify communication with our shareholders and other investors to give them a better under-standing of the value that the Ricoh Group can deliver to them, which we believe will increase their affection and loyalty to the Ricoh brand even more. At the Ricoh Group, we all look forward to sharing the future with you and receiving your support for many years to come.

Q7 In closing, tell us about your plans for shareholder returns and enterprise value.

ANNUAL REPORT 200817

Fiscal 2008 Milestones

Management

Global 100 Most Sustainable Corporations in the World for the fourth straight yearIn January 2008, Ricoh was ranked among the Global 100 Most Sustainable Corpora-tions in the World by the Canada-based firm, Corporate Knights Inc. The research evaluates 1,800 global corporations on their performance in three areas—the environ-ment, society, and governance—as well as the quality of their business operations, long-term financial performance, and oth-ers. This was the fourth consecutive year for Ricoh to be selected in this program.

Awards for Ricoh’s sustainable environmental managementIn February 2008, Ricoh received the Minister of Economy, Trade and Industry Award for its sustainable environmental management in the 17th Global Environ-ment Awards sponsored by the Fujisankei Communications Group. In July 2006, the company also won the Grand Pearl Prize in the environmental management section of the Fif th Japan Sustainable Manage-ment Awards. In 2007, Ricoh’s sustainable environmental management was rated the highest AAA by Tohmatsu Evaluation and Certification Organization Japan for the third consecutive year.

Ricoh Technology Center Wins the Nikkei Monozukuri AwardIn 2007, the Ricoh Technology Center, the main facility for Ricoh’s R&D initiatives, was among the winners of the Fourth Nikkei Monozukuri Award. Reasons for the selec-tion include its successful reform of de-velopment processes by adopting a cross-functional structure for its development activities, which resulted in an improvement in operational efficiency.

Research & Development

Construction of a copier and printer development centerRicoh plans to construct a new building in the Ricoh Technology Center in Ebina City, Kanagawa to strengthen its capabilities to de-velop copiers and printers. This will be a 24 billion yen investment. Construction is scheduled to begin in August 2008 with a target for completion of August 2010. Accordingly, employment at the Ricoh Technology Center will increase from the current 3,000 employees to 5,000.

A new manufacturing base in ThailandTo reinforce its manufacturing network in Asia, Ricoh plans to pur-chase a 121,000 m2 plot of land in Amata City, Rayong, Thailand to build a manufacturing plant for multifunctional copiers and laser printers. The new manufacturing base in Thailand will allow the company to improve its production capacities and to hedge against the risk of over-dependence on China. This 10 million yen project will begin in August 2008 with initial operation scheduled for September 2009. Ricoh anticipates the new plant will be able to produce a maxi-mum of 140,000 units per month.

A new polymerized toner plantRicoh intends to build a new polymerized toner plant on the premises of Tohoku Ricoh Co., Ltd with a 20 billion yen investment. The new plant will enable the company to meet rapidly increasing demand for this product and to diversify site-related risks. Currently, production of polymerized toners is centralized in a plant in Numazu, Shizuoka, where an additional new plant will begin operation in August 2008, producing 3,000 tonnes a year. Together with these new facilities, Ricoh’s annual capacity to produce polymerized tonners will be in-creased from the current 8,000 to the 14,000-tonne level by March 2010.

A component manufacturing subsidiary in Guangdong, ChinaIn February 2008, Ricoh established a new component company in Baoan District, Shenzhen City, Guangdong, which manufactures com-ponents for MFPs and laser printers (including printed circuit boards, molding parts, and combined units) to supply to Ricoh’s major pro-duction plant located in the Futian District of the same city. The new company is enabling Ricoh to strengthen its technological capabilities in China and to continue with production at ultra-low cost.

Ricoh Technology Center(From right) Mr. Chakchai, Deputy Chairman, Amata Corporation PCL.; Mr. Chitaworn, Deputy Secretary-General, Thailand’s Board of Investment; and Takashi Nakamura, Corporate Executive Vice President at Ricoh

ANNUAL REPORT 2008 18

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Sponsorship

Awarded BLI’s Pick of the Year

New Technologies

Development of a temperature sensor enabling the measurement of high temperatures up to 250°CRicoh has developed a semiconductor-based temperature sensor which is able to measure temperatures up to 250°C. This first-of-its-kind high temperature sensor was made possible by using silicon-on-insulator (SOI) wafers. Ricoh anticipates a wide range of applications for the sensor, including in automobiles, aircraft, and space vehicles and equipment. To achieve th is po ten t ia l , R icoh will strive to refine the technology for commer-cialization.

Announcing a new brand for the production printer marketIn May 2008, Ricoh released new RICOH Pro C900 color produc-tion printer to satisfy customers’ print-on-demand needs. The new product will make its debut as the first item of Ricoh’s new brand—the RICOH Pro Series. Featuring a printer controller manufactured by Electronics For Imaging, Inc., the RICOH Pro C900 is highly produc-tive, producing high-quality images both in color and monochrome at a print speed of 90 sheets per minute, while providing stable, reliable operation and excellent cost effectiveness.

At the press conference

Awards

Most Outstanding Printer Line of the Year and many highest category awards by Buyers Laboratory Inc. (BLI)Ricoh’s printer lineup was collectively awarded US-based BLI’s Most Outstanding Printer Line of the Year for 2007. Ricoh was also selected for BLI’s Pick of the Year Awards (Fall 2007) in four MFP categories (for the Aficio MP 1600, Aficio MP 2000, Aficio MP 2500, and Aficio MP C3500) and in two printer categories (for the Aficio SP 8100 DN and Aficio SP 9100DN).

The best in eight categories by BERTL Inc.’s Best AwardsBERTL, a US-based product evaluation firm, recognized Ricoh with its Best Awards in eight categories (for the Aficio MP C2500/C3000/C3500/C4500 in two categories; the Priport DX 3340 and DX 4542; the Priport HQ7000/9000; the Aficio SP C811DN; the Aficio MP 9000/1100/1350; the Aficio MP 5500/6500/7500; and the Aficio SP C410DN/C411DN).

Two Best of IT ChannelVision awards to U.S. subs divisionNorth America’s leading IT channel executives honored the Printing Solutions Division at Ricoh Americas Corporation with their semi-annual Best of IT ChannelVision award program for spring 2007. The division was selected as the Best System Builder Marketing Program/Promotion and the Best System Builder Presentation.

Title sponsor of the Women’s British OpenIn August 2007, Ricoh hosted the Ricoh Women’s British Open, the fi-nal tournament in the Four Major championships in women’s golf. The latest competition was held on the Old Course in St. Andrews, Scot-land, the “Home of Golf,” for the first time in its history. Lorena Ochoa (Mexico, world’s number one since 2006) won the championship with an overall score of five under par.

Special sponsorship for the Ricoh MLB Opening SeriesIn March 2008, Ricoh served as a special sponsor of the Ricoh MLB Opening Series 2008 of major league baseball for the second time since 2004. This opening series in Japan was a “triumphal return” for Daisuke Matsuzaka and Hideki Okajima of the defending world champions Red Sox. The games attracted a lot of attention worldwide, not to mention from Japan and the U.S.

ANNUAL REPORT 200819

Appointed/dismissed Appointed/dismissed Appointed/dismissed

Accounting audits

Operations audits

Accountingaudits

Operations audits

• Internal control system construction support• Internal audits

Audits

Judges the appropriatenessof accounting audits

General shareholders meeting

Group Management Committee Headquartersfunctions

Corporate Auditors’ OfficeFinance and Accounting DivisionCSR Division etc.

Board ofauditorsBoard of

directorsNomination and

Compensation Committee

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Corporate governance and internal control system diagram

Revision of executive compensation program

Corporate Governance

Overall framework for the Ricoh Group’s corporate governanceThe Ricoh Group’s corporate governance sys-tem is designed to ensure transparent business management underpinned by strong busi-ness ethics and legal compliance; to increase competitiveness in the market; and ultimately to achieve sustainable growth and increased group-wide enterprise value. We have identi-fied four key stakeholder groups—customers, shareholders, employees, and society—and defined respective policies to address each of these groups. We have a corporate auditor sys-tem in place to strengthen our board of direc-tors, and an executive officer system, to inten-sify our management oversight and business execution. By appointing some directors from outside of the company, we maintain transpar-ent management and fair, well-balanced deci-sion-making. Appointment, compensations and other related concerns of directors and execu-tive officers are deliberated and decided on by the Nomination and Compensation Committee, a permanent organ for this specific purpose.

Governance structure in the Ricoh GroupThe Ricoh Group has strengthened its cor-porate governance.

(1) Board of directorsTo ensure mutual oversight among board members and further improve manage-ment transparency, the board of directors consists of directors in equal positions (conventional titles such as executive managing director and managing director were abolished) and outside board mem-bers. Additionally, we have a Nomination and Compensation Committee as a perma-nent organ of the board of directors. The responsibilities of the committee include planning and determining appointments/dismissals as well as compensation poli-cies for directors and executive officers. The board of directors comprises 11 members (as of June 2008), including two outside directors.

(2) Executive function for group-wide management

Placed under the Chief Executive Officer (CEO), Chief Officers are responsible for important management functions. Chief Officers support the CEO in supervising the Group’s management strategies, im-portant decision making, and execution of

business, while taking charge of respective functions. Also, the CEO and Chief Officers make up the Group Management Commit-tee (GMC), which aims to achieve the man-agement goals (performance and strategic goals) of the whole Group. GMC plans and carries out management strategies as well as supervises the execution of business for the whole Group.

(3) Restructuring of the internal control system

To further strengthen the internal control function, an Internal Control Committee was organized within the GMC, while the Internal Management & Control Division was set up in April 2007 under the direct supervision of the President. The Internal Management & Control Division supervises internal control (SOX Law-related matters and strengthening of internal controls), while administering and promoting re-lated compliance, risk management, and internal audits. In the meantime, the Audit Office was replaced in April 2007 by the Corporate Auditors’ Office, whose function is to assist auditors, clearly showing that audits conducted by auditors and auditors’ staff are independent. The Board of Audi-tors consists of four members (as of June 2008), including two outside auditors.

Ricoh has been implementing its second management structure reform since fis-ca l 2006 to s trengthen i ts corporate governance and continuously increase the enterprise value. Specific actions taken in this reform program include the enhance-ment of the management oversight func-tion mainly through the establishment of a Nomination and Compensation Committee, as well as the strengthening of group-wide business execution capabilities through the introduction of a Chief Officer System and other measures.

In June 2007, as a part of its manage-ment structure reform, Ricoh has revised its executive compensation program. Key changes include abolishment of the retire-ment allowance program for officers and directors, introduction of share price-linked remunerations, expansion of performance-related compensation, and a higher correla-tion between corporate performance and executive compensation. Under this revi-sion, executive compensation has become more closely linked with Ricoh’s stock and operating performance. The revised program allows Ricoh’s executives to share the same interest with its shareholders and gives an incentive to achieve sustainable earnings growth and greater shareholder value.

ANNUAL REPORT 2008 20

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Corporate Social Responsibility (CSR)

* For more information, please read Ricoh Group Sustainability Report (Corporate Social Responsibility) 2008.

Developing compliance and deserving trustThe Ricoh Group approaches corporate social responsibility activities with the aim to be “a company that is respected by soci-ety and whose development is expected by people.” These compliance and attraction appeal creation activities are connected to two areas: “fundamental responsibilities to society” and “voluntary responsibilities to society” in the four fields given in the Corporate Social Responsibility Charter, namely “Integrity in Corporate Activities,” “Harmony with the Environment,” “Respect for People,” and “Harmony with Society.” As of fiscal 2008, Ricoh is moving forward with PDCA theme-by-theme, giving priority to (1) continued engagement in compliance activities, (2) endeavors to create appeal, (3) collaboration with partners, and (4) in-creased communication with stakeholders.

[Improvement in the quality of management]Awards given in recognition of the high quality of management in group companiesThe Ricoh Group believes that quality of management involves not only manage-ment systems and systems for of fer-ing goods and services but also overall customer-oriented efforts for activities to offer proposals to customers, disclosure of corporate information, and communica-tion. Each Group company is striving to improve its quality of management. In Oc-tober 2007, Ricoh Canada Inc. was award-ed the Gold Trophy in the Canada Awards for Excellence. The awards are given to high-quality and healthy private compa-nies, public institutions, and non-profit organizations in Canada which have con-stantly shown outstanding performance. In the meantime, Ricoh Europe PLC (RE), the European regional headquarters, was awarded an EFQM* Excellence Award in December 2007 by EFQM, a management quality assessment body for European companies. This is in recognition of the sales and service activities of the RE group as a whole, which embraces about 13,000 employees in 19 countries in Europe, the Middle East and Africa.* EFQM : European Foundation for Quality Manage-

ment

[Social contribution activities]Developing an organic vegetable garden using organic waste produced within the companyThe Ricoh Group’s social contribution activities focus on environmental conser-vation and providing young people with sound value, under the slogan “Foster attitudes and actions that value human be-ings and the Earth.” Social contributions initiated by employees have become more and more active in their respective regions of the world. At Ricoh Distribution Center (RDC), a distribution base in Uruguay, they have been maintaining a vegetable garden

since 2003, using organic waste produced within the company. Employees of the company converted 50 m2 of waste land into a vegetable garden, learning how to make compost and grow vegetables. Since 2005, they have donated vegetables grown in the garden to neighboring elementary schools. In 2006, they produced 200 kg of squashes, 420 kg of onions, and 100 kg of cabbages. RDC also invites students at a school for children with disabilities to the garden to enable them to experience work-ing on the land. Thus RDC offers a variety of support to the local community through this vegetable garden.

Ricoh has worked on color universal design (CUD),*1 because the popularization of multifunctional color copiers and printers has resulted in inconvenience for some partially color-blind people, due to the diver-sity in the perception of colors. Ricoh put multifunctional color copiers with CUD certification*2 on sale in August 2005 before any other company in the industry. Since then, Ricoh has increased the range of products adopting CUD. In February 2007, we started enhancing our efforts by issuing CUD guidelines, implementing key-person and on-site training, holding lecture meetings, and sharing information through our intranet. Thus, Ricoh established a company-wide system for CUD. Even for CUD products that are already on the market, efforts are being made to develop them to fulfill higher-level requests by conduct-ing surveys on their user-friendliness. Ricoh has promoted CUD not only for its products but also at each of its business sites. In fiscal 2008, we checked labels and notices at manufacturing sites and found many that were difficult for partially color-blind people to recognize. We thought it was necessary to improve them as soon as possible for safety’s sake, too, and set about doing just that.*1 Designs that can be easily recognized by many people regardless of individual differences in color perception *2 Certification given by the Color Universal Design Organization, an NPO

Promoting color universal design

Three ideas constituting the foundation of CSR

Activities to fulfill responsibilities beyond

response and contribution(in the narrow sense)

Simultaneous fulfillment of social responsibilities

and creation of economic value

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attractiveness

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• Setting high goals and striving to achieve them

• Approach to earning trust

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Goals

The most attractive company

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Objective of Ricoh Group CSRTo become a company that is loved by society andwhose development is expected by people who—

• wish to buy company’s products• wish to invest in the company• wish to work for the company

• wish to form a relationship with the company

• wish the company would enter the market

Corporate image the Ricoh

Group wants to create

Reliable and attractiveworldwide company

Sustainablesociety

ANNUAL REPORT 200821

Sustainable Environmental Management

The Ricoh Group is pursuing both environmental conservation and profit generation at an even higher level and enhancing its sustainable environmental management. Through these efforts, the Group intends to contribute to achieving a sus-tainable society and to become a corporation that continues growing. The Ricoh Group describes its vision for an ideal society and global environment in the “Three Ps Balance.” In its Extra-Long-Term Environmental Vision the Group also ex-presses its recognition that advanced nations need to reduce their environmental impact to one-eighth the fiscal 2000 levels

Ricoh Global Eco Action—globally expanding the network of Ricoh’s sustainable environmental management

Becoming a signatory member of the U.N. Global Compact’s “Caring for Climate: The Business Leadership Platform”The United Nations Global Compact was proposed by then U.N. Secretary-General Kofi Annan to world business leaders in 1999. This framework calls for aligning business activities with nine principles* in the areas of human rights, labor, and the environment. In April 2002, Ricoh became the second Japanese company to sign the Global Compact. In June 2007, Ricoh also became a signatory to Caring for Climate: The Business Leadership Platform. * Currently 10 principles as a result of its revision in

2004 to include the anti-corruption principle

Participation in CDM projectsRicoh is actively preparing for the Clean Development Mechanism (CDM)* as one way of mitigating the increase of CO2 emissions resulting from rapid business expansion associated with M&A, etc. and from external factors. When selecting CDM projects, Ricoh tries to choose proj-ects that contribute to the conservation of ecosystems and improvement of living standards of the local people, rather than just focusing on cost performance of the projects. Currently three sets of CDM proj-ects are underway: wind power projects

in India, bagasse electricity generation projects in El Salvador, and afforestation projects in Ecuador. In January 2008, Ricoh received its first emission reduction credits of 30,632 tonnes for its projects in India.* Clean Development Mechanism: a mechanism through

which businesses or organizations in advanced na-tions conduct greenhouse-gas emission reduction or removal projects in developing countries, and have the resulting reduction/removal reflected in their own CO2 reduction goals.

Ricoh stocks incorporated in leading SRI indicesIn Japan, Ricoh’s stocks are incorporated in many eco funds and SRI funds. Also, the Morningstar Socially Responsible In-vestment Index has included Ricoh since its establishment in 2003. In addition, Ricoh has been a constituent member of the Dow Jones Sustainability Indexes (DJSI), which are provided by Dow Jones & Company (U.S.A.) and the SAM Group (Switzerland), for six consecutive years and of the FTSE4Good Global Index for five years in a row. The latter index is pub-lished by the FTSE Group, a joint venture between The Financial Times (U.K.) and the London Stock Exchange.[As of May 1, 2008]

by 2050. Based on this recognition, we have set mid- to long-term targets, and put into effect a specific environmental action plan accordingly. As we recognize that global warming is an important issue for businesses, our group companies in Japan have set a higher goal of reducing total emissions by 12% of levels for fiscal 1991 by fiscal 2011, compared with the goal for Japan of a 6% reduction set out in the Kyoto Protocol. Each and every employee of the Ricoh Group is striving to reduce global warming under this goal, which has been set in anticipation of continuous growth of the Group’s business.

*Japan: 46 companies, Asia Pacific/India: 11 companies (in 8 nations/re-gions), The Americas: 16 companies (in 14 nations/regions), Europe: 26 companies (in 14 nations), China: 5 companies

Publicizing Ricoh Global Eco Action on the street (Ricoh India)

Bike commuters wearing “Ricoh Eco Logo” jackets (GRAM of the U.K.)

*For more information, please read Ricoh Group Sustainability Report (Environment) 2008.

Enhancing sustainable environmental management to become a corporation that is always growing

2013 2040 2050203020202010

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Technical innovation effect

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Setting goals using the back-casting method

How to Set Environmental Goals

Environmental Action Plan for Fiscal 2009 and Thereafter

2013 Long-Term Environmental

Goals

2050 Extra-Long-Term

Environmental Vision

Ideal society we should pursue

Three Ps Balance

Goals are set based on the 2050

Extra-Long-Term Environmental Vision

Major direction and goals

All aspects of the Earth are well

balanced.

On the night of June 5, 2007, Ricoh’s seven advertising towers and 37 signs usually lit up at night in various parts of the world were turned off. It was a part of Ricoh Global Eco Action, under which a variety of environmentally friendly actions were taken all over the world for the benefit of the Earth. In its second year, this awareness-raising program for employees was participated in by about 46,000 employees at 104 group companies* in 38 nations and regions, marking a significant increase in the number of participants from 2006. By coinciding with the U.N.’s World Environment Day, Ricoh Global Eco Action in 2007 expanded its network by attracting a number of external participants, such as customers, governments, and non-profit organizations.

Financial Section

Management,s Discussion and Analysis of Fiscal 2008 Results

Selected Financial Data

Consolidated Balance Sheets

Consolidated Statements of Income

Consolidated Statements of Shareholders, Investment

Consolidated Statements of Cash Flows

Notes to Consolidated Financial Statements

Management's Report on Internal Control Over Financial Reporting

Report of Independent Registered Public Accounting Firm

Corporate Social Responsibility

Ricoh,s Global Network

Senior Management

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22ANNUAL REPORT 2008

23 ANNUAL REPORT 2008

Management's Discussion and Analysis of Fiscal 2008 Results

SalesConsolidated net sales of Ricoh Group for fiscal year 2008 (April 1,

2007 to March 31, 2008) increased by 7.3% to ¥2,219.9 billion

($22,200 million) from the previous corresponding period. This

marks the fourteenth consecutive year-on-year revenue increase.

During this period, the average yen exchange rates were ¥114.40

against the U.S. dollar (up ¥2.62) and ¥161.69 against the euro

(down ¥11.61). Sales would have increased by 5.4% excluding the

effects of foreign currency exchange fluctuations.

Sales in all the segments such as the Office Solutions, Industrial

Products and Other increased. As for the Office Solutions, sales of

its digital plain paper copiers (“PPCs”), multifunctional printers

(“MFPs”) and laser printers, mainly for color products,

continuously increased and Information